Anyone remember the music industry?
Back in the 20th century, Earth had what was called "the music industry", which was a clique of sharks who used every trick in the book to screw every penny they could out of people and limit/control how and what people listened to. Independent labels rarely became big because they were squeezed out by the big boys, unless they took the shilling and became largely a façade for one of the big boys, who would then effectively have an alternative music scene sown up just as tightly as the Kylie & Jason brigade.
What's going on with h.264 seems to me to be a very similar thing. This pool of sharks want to funnel everyone into buying their product with no viable choice. They're secretly happy that Theora exists because it's rubbish and is never going to take off, but it is something they can point to in order to keep regulators off their back. VP8 changes that, offering a viable alternative that will block their revenue streams, and now they're putting on the big squeeze.
Thankfully, Google have bigger pockets than those old independent labels, so there's still a chance. But once upon a time no one ever thought MS would be taken to court, risk being broken up for anti-trust abuses, fined billions or be forced to offer their customers a choice of browsers, so it's not impossible that Google will still end up being sued and give up.
Just remember when the British Empire ruled India and made it compulsory for all Indians to buy kurtas and dhotis that were manufactured in England, in order to keep mills in Manchester and Birmingham highly profitable. Apple and MS want to force feed us h.264 for the same reasons, though Apple particularly because they're now primarily a media company whose business model depends on being at the centre of a lucrative eco-system, not a computer or software company who just care about how many copies of their software they sell.
Sadly, as much as people moaned about the sharp practices of the music industry years ago (high prices, selling the same track to people several times on singles, re-releases with one remixed track, albums, EPs and compilations with 'exclusive' new tracks, etc), they never voted with their feet until broadband came along and then they couldn't stick the knife in fast enough to get their revenge. So ordinary users aren't going to care about codecs and their implications. It's all down to Google this time. How comfortable are we to be 'saved' by a company who track us online and even drive around sniffing our Wi-Fi signals in order to put a land address to an IP address?